Charities Property Fund

Prime retail asset acquisition

The Charities Property Fund (“the Fund”), managed by international real estate investment manager Savills Investment Management, has purchased the freehold interest in a prime retail asset located close to the Metro Centre in Gateshead for a price of £33.7 million.

The property, recently underlet to Sports Direct and The Range from Tesco, extends to approximately 150,000 sq ft. The lease provides an unexpired term certain of over 16 years to break, and is subject to five yearly rent reviews linked to RPI collared and capped at 1% and 4%.

The price reflects a net initial yield of 5.56%, with an estimated reversion to 6.1% at the next RPI review in August 2018.

Savills Investment Management was advised by Staunton Whiteman. The vendor was advised by Savills.

“This purchase was a rare opportunity to acquire a prominent, sizable and income producing site next to an IKEA and close to the Metro Centre which is one of the most recognised retailing destinations in the country attracting over 21 million shoppers each year. The length, security and RPI nature of the income is attractive, particularly as the investment is underpinned by a valuable residual position given the prime location and open A1 consent including food.

“Two good quality retailers, Sports Direct and The Range, occupy the property under sub-leases from Tesco and are trading above expectations. This will provide potential opportunities for effective asset management in the future.”